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Monday, September 13, 2010

Banks Forced to Double Reserves


New financial guidelines were set by global officials meeting in Switzerland on Sunday. The agreement referred to as the Basel III agreement, requires the Banks to increase their capital cushion to 4.5% of assets. The current requirement is 2%.Banks will also be required to hold an additional 2.5 % of assets to protect against periods of future stress.

The increase will be done gradually with implementation of the new standards to commence Jan. 1,2013 and spread out over the next two years.

Bank watchdogs such as the Fed and FDIC will monitor and enforce the regulations once they have been adopted by each country.

The purpose of these new regulations is to avoid another financial crisis similar to that of 2008, which nearly precipitated a world wide depression.

Members of the Basel Committee on Banking Supervision (which is made up of delegates from 27 countries) are convinced that the new guidelines will help to stabilize the banking industry.

It appears investors agree as banking shares have shown a rally as a result of this news. Whether or not that rally can be sustained is anyone's guess, only the future will tell the true story. However, The Hoss feels this move is a step in the right direction.

Stay on Track,Money Magazine Hoss

Next Hoss Cents Free Financial Money Magazine Post: Sept. 19,2010

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4 comments:

  1. I think that didnt help as we're in another financial crisi at the moment! thanks for the post!

    ReplyDelete
  2. Great, great post! It’s something I have never thought about, really, but it makes a whole lot of sense. Thanks for sharing

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  3. Really a great post.I liked it and i will share it with others too.

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  4. its nice to read a useful article for beginner like me. Some of points from this article are very helpful for me as I haven’t considered them yet. I would like to say thank you for sharing this cool article. Bookmarked and sharing for friends.

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